Behind the scenes at other co-ops

Disclaimer:​The statements on this website are opinions of various people at co-ops around the country and are not offered as statements of fact by Take Back the Co-op, but are presented to demonstrate the depth of dissatisfaction and concern held by workers, member-owners, and board members.

Inside the Co-op: National

Since we launched this website on September 2, 2016 we have heard fromco-ops across the country. Workers, managers, board members, and member-owners from 16 different co-ops in 13 different states have contacted us to share their concerns about what is happening at their co-ops.

New York

"Greetings to Member-Owners of La Montañita Co-op, New Mexico, from the Member-Owners and Board Members of the Honest Weight Food Co-op, Albany, New York.We celebrate your bold effort to take back your co-op, and we applaud your many efforts to reach out to other food co-ops nationwide to inform and support their struggles. We know you can succeed in taking back your co-op, because we took ours back.Just a year ago our co-op found itself in what seemed like an impossible situation. A series of decisions had been made that a majority of our Membership could not support and that were not supportive of our Membership. In particular, these decisions would have caused our Membership to lose our decision making authority. We found ourselves petitioning for a Special Membership Meeting to recall the Board.

We had our Special Membership Meeting! We voted to recommend a change in our management structure. We approved a recommendation to evaluate and remedy concerns about our leadership team. We seated new members on our Board of Directors. At that time we did not fully understand our financial status, which we have learned also needed a turnaround.

Fortunately, we were successful in creating change. We have implemented a new leadership structure and hired new managers. Our Member-Owners have started an independent online newsletter, the Co-op Voice, which gives us back the direct voice we lost several years ago. We have had three strong financial quarters, and our financial picture is improving.The Member-Owners and Board Members of Honest Weight Food Co-op respect you and the quality of the groundwork you have done. May your Special Membership Meeting be well attended, be peaceful, and above all, be successful in creating the changes that you will need to fully regain decision authority.

To honor our past, for the promise of our future, and true to our Mission Statement, we took action to exercise our rights and responsibilities as Member-Owners of Honest Weight Food Coop. We wish you great success.

I’m writing to you because the corporatization and lack of transparency you are facing is strikingly similar to what is happening to our Co-op.

Like other member-owners of Eastside Food Co-op in Minneapolis, Minnesota, I received a letter in June informing me of the proposed consolidation of our Co-op with Linden Hills Co-op and Wedge Community Co-op. Our Co-ops would no longer be autonomous and independent. Instead, a single CEO would run the entire system.

I was shocked by the news! Why were member-owners just now learning about this plan? Why hadn’t we been involved in this major decision that would determine the future of our Co-op?

It turns out that for three years, the merger had been planned behind closed doors. CDS Consulting, the General Managers (GMs) of the three Co-ops, and board members who were in favor of the merger, attended the secret meetings.

During this process, six Eastside Food Co-op board members resigned because they disagreed with the plan and felt it was wrong to keep it hidden from member-owners. Due to the “One Voice” policy and the nondisclosure agreement they had been told to sign, they had no way of sharing their opinion. They were silenced.

When the news was finally shared with member-owners via the letter in June, many people were deeply concerned. The letter did not include a fact-based explanation for the consolidation. The current board and a paid outside consultant held “listening sessions” to attempt to soothe the membership.

I attended one of the sessions and sat through pro-consolidation speeches by the three GM’s and a handful of employees. The arguments for consolidation were one-sided and based on faulty logic. The meeting was supposed to be a Q&A, but they refused to answer questions. Instead, they wrote them down and said they’d answer later on a website. They hushed any other viewpoints, saying they had “run out of time.” The meeting was a sham of cooperative values; it mirrored corporate culture.

After that meeting, I decided to run for the board. As a founding member of Eastside Food Co-op, I helped recruit the first 135 member-owners long before the Co-op even had a building. I am confident this is not the direction our membership wants to go. Our Co-op is about to become a corporation, not a co-op. It’s about to have a single CEO and multiple standardized branches that are increasingly disconnected from the very people who supposedly own the Co-op.

That’s why I’m working with four other board candidates to try to turn this ship around, reverse consolidation, and get our local Co-op back to its cooperative roots.

I look forward to working with other co-ops around the country who are also facing the corporatization of our local co-ops. Thank you La Montañita member-owners for working to take back your Co-op and uphold cooperative principles. We stand with you!"

"I came across your website a few days ago. As the former VP of our board, reading it has been dispiriting and encouraging all at the same time. It has helped me to understand what is happening to my Co-op. I thought it was a unique situation, but I now see that we are not alone. I am glad to know there are others out there fighting for real co-op values.I was elected to the board of the Eastside Food Co-op in Minneapolis, MN almost 2 years ago. I came with no previous board experience, just a deep interest in the local food system and a desire to contribute to the co-op community.The influence of CDS Consulting on our board is so ubiquitous that at first I didn't really give it much thought. CDS teaches the Co-op 101 class. They have a library of articles that we read from every month. When questions arise we go to CDS consultants for the answers. We even have a former board President turned CDS consultant, who is now back on the board by appointment. It really is difficult for a new board member to know where CDS’s influence begins and ends.Still, it took a while for me to start to question the influence of CDS. They have so much experience and seemed so well meaning. But the more I learned and the more I thought about it, the more troubled I became.Policy Governance is a good example. The board and GM both have clearly defined roles and expectations, allowing for efficient operations. I understood the logic of Policy Governance, but couldn't understand why it took up so much of our meetings. While I still see value in the idea of Policy Governance, the way CDS advised us to use it at Eastside Food Co-op seems more like busy work for board members; something meant to keep us occupied and out of the way while management runs the Co-op. We seemed to spend more time worrying about what we were not supposed to do than we did thinking about what we should do.The influence of CDS led our Co-op to undertake a major expansion project. While it is too early to know the long-term outcome of the expansion, it has left the Co-op in debt for years to come. At the same time, we’ve been discussing a merger with 2 other co-ops. The discussion and planning of the merger were done under a nondisclosure agreement that kept Co-op member-owners completely in the dark.The board is now all too comfortable operating in private, executive sessions. During this period, the board also enforced a “Code of Conduct” for board members that was used to discourage dissent.One of the turning points for me was watching a video from the CDS archives explaining how co-ops needed to respond to the “New Normal.” The message was a highly corporate vision of what co-ops should be: continual growth at all costs, “organic” as a marketing term instead of a core principle, treating members as consumers rather than cooperators, and making decisions based on market forces instead of co-op values.The people who started the food co-op movement challenged the food system and made real change. They did it by following their values. Forgetting those values will be the end of co-ops."

Seth Erling, former board VP, Eastside Food Co-op, Minneapolis, MN

Oregon

​Food Front Co-op, Portland"Hello La Montañita! Greetings from Food Front Co-op in Portland, OR!Food Front started in 1972 with humble beginnings as a bulk food and produce shop in the northwest part of town. Our members are our family and we are theirs.Unfortunately, we started having problems at our Co-op in 2008, after we expanded to a second location where three health food stores had failed previously. The GM decided to sell Coca-Cola, Doritos, and Snickers bars at the new location, saying that some of our member-owners buy those products.Then in late 2012 and early 2013, while we were struggling financially and losing money each year, we did an expensive remodel of our original store. The remodel went way over budget and cost over a million dollars.All of this happened while our board was being advised and trained by CDS Consulting.By 2013 and 2014, Co-op member-owners stopped receiving dividends, we had widespread staff dissatisfaction, our Co-op was in financial peril, our board was passive, workers were scared of the GM (who created an atmosphere of fear and retaliation), and we had a lack of transparency due to the board following the Policy Governance model. In late 2014, a neighborhood newspaper called the Northwest Examiner published articles detailing the problems [see below for links and excerpts]. Our member-owners grew increasingly concerned that our Co-op was in trouble and that it no longer upheld co-op values.In January 2015, two people flew in to calm the "angry mob.” Those two people were C.E. Pugh, the COO of NCG, and Peg Nolan, a CDS consultant. They gave a presentation about “the New Normal” and assurances that NCG would intervene and offer assistance. They told us that our board was inexperienced and needed help. It left some of our member-owners satisfied and it seemed we were in good hands. We were wrong.A few months later, Peg Nolan became our GM (while she was still a CDS consultant). She started changing our stores to sell more conventional products, and was even more authoritarian and threatening than our previous GM. Worker morale was shattered.Meanwhile, our board remained quiet. They were told to speak with “One Voice” and at board meetings they listened but never answered questions. During the public portion of the board meetings, no details were discussed; then they’d have member-owners and workers leave, and they’d hold an executive session, which we weren’t privy to.The underlying issue is that the GM and consultants were limiting access to information. Not just to member-owners, but even to the board. Anything that was considered “operational” (staff dissatisfaction, changes in products, etc.) was kept from the board.Once again, we attended board meetings, wrote letters, and held our own meetings to try to influence Food Front’s direction. Nothing changed.We finally decided it was time to organize. We knew a union would help protect our voices and give us a chance to return to cooperative values. As soon as we voted to unionize, the threats and intimidation from the GM increased. We were constantly watched and she made a list of workers who were loyal to her and those who were not. We even received a settlement through the NLRB, due to retaliation against the workers who unionized.It was through the collective bargaining process that we finally discovered that our Co-op was not just in debt, but in debt to NCG.

We were told that as a result there was no money to improve wages. There has always been money for CDS consultants and the expansions they advocate and profit from, but not for those who make Food Front the soulful, compassionate, neighborhood Co-op it is, and it’s slipping away from us.We stand with you, La Montañita. We are encouraged and inspired by your movement to take your Co-op back. In the process, you will make this a national movement. As workers, we want to move things in a similar direction at our Co-op.We heard you’ll be getting a visit from NCG and CDS representatives in the next week. That’s the same tactic they used with us. We hope you aren’t fooled by their presentation the way we were. We lost a great opportunity to take back our Co-op—don’t make the same mistake. These are not people who have your Co-op’s best interests in mind. They want to continue to control co-ops and lead them down a path that profits their organizations and does not support co-op values."

Co-op Crash"...the number of dissidents and the consistency of their stories should be troubling to an organization built on communal values and a higher social purpose. And the co-op’s failure to entertain the possibility that the chafing may stem from internal failings warranting open discussion seems unbefitting of a democratically governed, member-owned co-op...

They describe Jarvis [The General Manager] as a 'dictator' who ruthlessly punishes those who challenge her authority while rewarding an inner core loyal to her...

...the co-op’s chief financial officer from 2011-13, Joe Bailey, approached the newspaper with a broad and deep critique of the organization’s predicament.'There is a grave situation that this has been going on for six years and hasn’t been rectified by current management, and it needs to change,' he [Joe Bailey, former CFO] said.

He suspected the co-op was only able to meet its cash-flow obligations because of new borrowing.

He warned the board to change its 'passive, hands-off approach' to operations and stop 'hiding behind' arcane governance practices.Above all, he advised co-op leadership to be more open about its predicament.

'The owners have the right to know the financial condition, the health of the business,' he said...

If the board is in the dark about the inner workings of management, it could be traced to a concept introduced by Jarvis when she became general manager in 1993. Policy governance is a management system in wide use by co-ops and nonprofits around the country. As she applies it, the system distances the board from personnel and operations details. The board deals with broad policies and tracks progress toward goals.​Complaints by staff about management are beyond their scope. The last resort for employees who feel the general manager has given them a raw deal is a private consultant Jarvis may hire to settle the dispute."

Food Front board member quits in protest"Rather than put his name to a public statement he believed untrue, Tom Mattox resigned from the Food Front Cooperative board of directors last month.​Reacting to the NW Examiner’s November cover story, 'Co-op Crash,' Food Front President Brandon Rydell insisted Mattox and the four other directors sign a statement asserting that the board did not 'consider the main sources of the NW Examiner article … to be credible.'

'I had to make a choice,' said Mattox, the co-op’s community outreach and marketing director from 2006-11 and board member the past two years.

'I knew I was not going to be able to sign off on it,' he said, noting that the story 'rang true to my experience' and the board’s response amounted to 'circling the wagons and saying everything is fine.'

Reinforcing his demand for unanimous censure of the article, Rydell [the board President] warned his colleagues of the board’s code of loyalty prohibiting open opposition to board positions...

'This is supposed to be a democracy,' Mattox mused, 'and public dissent is not allowed in a democratic organization?'...

'Since I departed, more than a dozen talented and dedicated staff I personally know from all levels of the co-op have left Food Front disappointed, disheartened and even distraught. It was heartbreaking to watch people who cared deeply about Food Front’s mission leave one by one.'...

While Mattox joined the board with a stated goal of making Food Front 'a great place to work,' he soon grew troubled by the organization’s blasé attitude toward financial losses.

While annual reports showing continuing deficits for six straight years came to their attention, Mattox said board members invariably accepted General Manager Holly Jarvis’ explanations as to what had gone wrong and her plans for corrective action.

'Rubber stamping is what we’ve been doing,' he said...Mattox said the Examiner article prodded him to act.

While trying to be both a loyal board member and force for reform, he found it too easy to take the path of least resistance.

'I saw myself going along with the way things were going,' he said. 'I didn’t like what I saw in myself.'"